It has been a difficult year for Asos (ASC). Management admits to having been “overambitious” in its international expansion, leading to problems with stock availability, sales and costs in the US and EU – two key growth markets for the group. The full-year results showed pre-tax profits down by 68 per cent, while the gross margin was down 240 basis points. Why then, were the shares up by a fifth?
The retracement could simply point to a relief rally. The results were broadly in line with market expectations, but investor sentiment had already soured following release of a July trading statement, which guided for profits roughly 40 per cent below previous expectations.
Management highlighted the disruption brought about by "substantial operational change", though issues with the ‘Euro hub’ distribution centre have been resolved, even though work on improving product mix and building up stock in the US is ongoing.
Peel Hunt is forecasting adjusted EPS of 55.5p in FY2020, up from 29.4p this year.
| ASOS (ASC) | ||||
| ORD PRICE: | 3,048p | MARKET VALUE: | £2.56bn | |
| TOUCH: | 3,047-3,053p | 12-MONTH HIGH: | 6,152p | LOW: 2,033p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 104 | |
| NET ASSET VALUE: | 541p* | NET DEBT: | 20% | |
| Year to 31 Aug | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 1.14 | 53 | 49.4 | nil |
| 2016 | 1.44 | 43 | 41.8 | nil |
| 2017 | 1.92 | 80 | 77.2 | nil |
| 2018 | 2.42 | 102 | 98.9 | nil |
| 2019 | 2.73 | 33 | 29.4 | nil |
| % change | +13 | -68 | -70 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £326m, or 389p a share | ||||
